Dear Reader,
Donald Trump has lobbed a fresh round of tariff threats at a wide variety of economies, ranging from 20-40 percent aimed at Japan, South Korea, Canada, Serbia, Cambodia, Brunei and others unless they renegotiate deals by August 1. Copper gets a special 50 percent mention, sending prices on a roller-coaster ride — We wrote about how Dr Copper faces a tough tariff challenge. But what’s even more amazing than Trump’s hubris is the collective shrug of the markets. We pointed out how Asian stocks have been resilient despite the new tariff threats but wondered whether there is a Trump strategy in play. It’s almost as if investors have developed tariff fatigue, muttering, "The more things change, the more they stay the same.’’
Because markets have seen this show before. The template is familiar: threat, delay, offer to negotiate, and possibly — if the mood permits — a retraction or two. In the meantime, Asian supply chains are slowly diversifying, investment flows are trickling away from overconcentration, and countries like India are positioning themselves as plausible alternatives to China.
Back in India, the June quarter earnings season (Q1 FY26) is expected to deliver very modest cheer. Once you remove the uplifting performance of the oil marketing companies that have benefited from the bonanza of strong refining margins, earnings growth is likely to be in the low single digits. Consumer durables, electric utilities, and IT services are expected to post single-digit earnings growth — The TCS results are an ominous portent of what is to come. But picking stocks is all about nuance — this mid-sized IT company, for instance, is a high conviction pick because of its diversified business model and excellent revenue visibility. Banks will suffer from profitability coming under pressure, but have the advantage of reasonable valuations. For example, valuation is a real draw for this mid-sized bank. The risks to auto sector earnings are mounting. And for India’s much-vaunted defence stocks, their valuations are the envy of their global peers.
But hope springs eternal in the markets, even more so in the Indian markets. Groww, Zerodha together lose 11 lakh active investors
Ring the bells that still can ring
Forget your perfect offering
There is a crack, a crack in everything
That's how the light gets in.
The consensus is that after a weak June quarter, the September quarter will be a bumper one. We said, for example, that investors should look beyond the Q1 NBFC results to the more positive outlook for the rest of the year. The worst, it seems, is behind us — unless, of course, President Trump decides to change his mind again. India’s prospects are buoyed by a low base from last year’s elections, good monsoons, and that life-saver — the festive season. Inflation is under control, and a sharp 100 basis point rate cut in 2025 should help revive economic activity as the benefits trickle down. We emphasised, though, that a slowing nominal GDP growth (thanks to lower inflation) signals soft corporate earnings in FY26.
Lower inflation should be good for FMCG demand, we said, but also pointed out that for earnings it’s still a glass half full. Sticking to the consumer space, gold companies have posted a “shining” performance in Q1 FY26. The electric two-wheeler (E2W) market is abuzz with speculation: can Ather finally overtake Ola? Heritage Foods is on a quest to become a high-margin dairy brand, and V-Guard continues to be a favourite in the durable goods space. For consumer giant HUL, we wondered whether the new CEO could turn around its underperformance.
Meanwhile, the IPO market had its own drama. IPO-bound unlisted stocks have seen sharp corrections, especially after the HDB Financial listing setback. Smartworks Coworking Spaces and Travel Food Services are among the latest to test investor appetite.
No discussion of this week’s markets will be complete without the Jane Street crackdown. The high-frequency trading powerhouse has found itself in SEBI’s crosshairs, which see the firm’s arbitrage-heavy operations as part of a “sinister scheme.” According to the Financial Times, “Traders at Jane Street’s rivals now expect regulators in other countries to start making their own inquiries to check for malfeasance in their markets”. For once, SEBI may be the trend-setter.
The Jane Street episode shone the spotlight once again on the dark side of India’s derivatives boom. Young, low-income traders, lured by the mirage of easy money, are bearing the brunt. Derivatives, once the preserve of institutional traders, have now become a playground for risk-hungry amateurs with smartphones and optimism. Because, as the well-known song goes, ‘Everybody wants to Rule the World’. What they want and what they get, of course, are very different things. Which is why curbing the enthusiasm of inexperienced retail F&O traders could be a much-needed bitter but life-saving medicine.
Retail investors are beginning to show signs of fatigue. Groww and Zerodha have lost a combined 1.1 million active investors in H1 2025, and the top four brokers have seen a net decline of nearly 2 million. Whether this marks a pause or a pullback is unclear, but the euphoria may be ebbing.
The seemingly paradoxical market calm in the face of Trump's latest tariff salvos reveals a deeper strategic game at play. What appears to be random trade bluster is actually part of a calculated effort to systematically undermine China's global trade network, forcing supply chains to diversify and investment flows to redirect, maybe toward alternative destinations like India.
The markets may have learned to stop worrying about tariff threats, but they'll sooner or later be forced to adapt to a world where America's trade weapon is fundamentally reordering global commerce and geopolitics. For Indian investors, this isn't just about surviving the next earnings season — It's about capitalising on a once-in-a-generation shift in global trade and power relations.
Cheers,
Manas Chakravarty
In case you missed them, here are some of the other stories and insights we published this week, apart from our technical picks in the equity, commodity, and forex markets:
Stocks
PN Gadgil Jewellers, Should you decorate your portfolio with this auto ancillary stock? This housing finance company is best placed in a falling rate scenario, Delhivery
Markets
New road assets ensure sustained returns for IRB InvIT unitholders
India's small, midcap shares continue to grow at the cost of largecaps
Groww, Zerodha together lose 11 lakh active investors in the first half of 2025
Oil prices are down. But don’t pop the champagne yet!
Financial Times
WPP turns to Microsoft executive as AI threatens ‘Kodak moment’
The law of unintended consequences strikes again
The global economy is suffering from the Rashomon effect
What Donald Trump’s ‘Big, Beautiful Bill’ means for Corporate America
Gates open for affluent to invest in private credit
Companies and sectors
Is ICICI Pru AMC a strong bet in the booming mutual fund industry?
Pressure builds on Indian pharma as Trump threatens massive tariffs
Post-listing, Siemens Energy scripts a tale of value unlocking
India’s defence stocks dwarf global peers on valuations
Impending jump in patent expiries to benefit Indian pharma
Paper industry's margins hit two-decade Low: Are we finally at the cycle bottom?
What's behind the sharp surge in securitisation volumes in Q4?
Amazon's diagnostics foray could lead to a seismic shift in the market
Economy and policy
Is India more socialist than China?
Can a flood of liquidity trigger another round of high inflation?
Giving workers their due can lower income inequality
Geopolitics & Geoeconomics
Trump’s Vietnam tariff deal signals Asia’s vulnerability to US-China rivalry
India walks the thin line between BRICS and strategic independence
India’s Tibet stand signals diplomatic maturity
Tech & Startups
Capgemini’s WNS acquisition a precursor to more AI-fuelled consolidation: Experts
No humans needed: Kepler’s 6-satellite swarm will hunt threats from space in 90 minutes
Inside Indian fintech’s new AI playbook: Why Model Context Protocol is gaining popularity
Others
Personal Finance: Use this checklist to manage risks posed by unlisted investments
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